What is a Missing Market?

A missing market is an economic inefficiency whereby a market for a commodity doesn't exist. The most common example is the idea that the cost of a particular type of environmental damage isn't accounted for by an economy.

Example

Two technologies compete for energy consumers. They both produce energy at the same cost. However, one produces far more pollution than the other. In an efficient economic model, a market would exist to cap pollution to a country's quality of life targets. The technology that produces more pollution would need to purchase the right to do so. This results in more sales for the clean technology. In other words, economic decisions become more rational and efficient. When the market for pollution is missing, the technology that pollutes more may become dominant even where the clean technology is cost competitive.

Overview: Missing Market
Type	Economics
Definition	When a commodity lacks a market resulting in economic inefficiencies.
Common Interpretation	Economic models that lack markets to price negative impacts to quality of life are inefficient.
Related Concepts	Quality Of Life Happiness Economics Circular Economy Sustainable Economics